Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘SDR’

New Life for the SDR?

Posted by hkarner - 25. April 2017

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Notfall-Plan: Wie der IWF einen Crash der USA verhindern kann

Posted by hkarner - 6. Dezember 2016

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Der IWF verfügt mit den sogenannten Sonderziehungsrechten über eine mächtige Waffe, die die globale Dominanz der USA noch für einige Zeit aufrechterhalten kann.

Inflationäres Gelddrucken, Zinssenkungen bis in den Negativbereich, Blasenbildungen an allen Finanzmärkten – und das bei gleichzeitiger Stagnation der Weltwirtschaft: Das globale Finanzsystem scheint derzeit auf dem direkten Weg in seine dritte existenzielle Krise.

Zweimal stand es bereits vor dem Zusammenbruch. 1998 geriet der Hedgefonds Long Term Capital Management (LTCM) ins Taumeln und wurde durch eine gemeinsame Aktion der im Falle seines Crashs gefährdeten Wall-Street-Banken gerettet.

Zehn Jahre später reichte die Finanzkraft einzelner Banken im Zuge der Subprime-Hypothekenkrise nicht mehr aus. Die Staaten mussten einspringen, um das System zu stabilisieren. Da ihre Möglichkeiten sich schon bald erschöpften, haben die Zentralbanken inzwischen weltweit die Führungsrolle übernommen. Seit 2008 haben sie Billionen in verschiedenen Währungen gedruckt und die Leitzinsen mehr als 660 Mal gesenkt.

So kann es auf Dauer nicht weitergehen Den Rest des Beitrags lesen »

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China’s SDR Distraction

Posted by hkarner - 12. Oktober 2016

Photo of Barry Eichengreen

Barry Eichengreen

Barry Eichengreen is Professor of Economics at the University of California, Berkeley; Pitt Professor of American History and Institutions at the University of Cambridge; and a former senior policy adviser at the International Monetary Fund. His latest book is Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History.

OCT 10, 2016, Project Syndicate

WASHINGTON, DC – At the start of October, China’s currency, the renminbi, was added to the basket of currencies that make up the International Monetary Fund’s Special Drawing Rights, or SDR. Previously, the SDR had been defined as a weighted average of the dollar, euro, British pound, and Japanese yen. Now that the renminbi has been added, it can claim to be one of just five truly global currencies.

Should we care? The Chinese certainly do. In Beijing, where I was late last month, joining the rarefied SDR club was all people wanted to talk about. (Okay, truth be told, they also wanted to talk about Donald Trump.)

Seeing the renminbi added to the SDR basket was a matter of national pride. It symbolized China’s emergence as a global power. And it vindicated the government’s efforts to encourage use of the renminbi in cross-border transactions, freeing China and the rest of the world from over-dependence on the dollar.

But the fact of the matter is that adding the renminbi to the SDR basket has little practical significance. The SDR is not a currency; it is just the unit in which the IMF reports its financial accounts. Only a small handful of international bonds are denominated in SDRs, because banks and firms do not find this option particularly attractive. The main issuer of SDR bonds is the IMF’s sister organization, the World Bank (the Fund itself is not authorized to issue bonds).

The only practical implication of adding the renminbi to the SDR basket is that it now becomes a currency that countries can draw, along with the SDR’s other four constituent currencies, when they borrow from the IMF. Only time will tell how many wish to do so.

The Chinese argue that the renminbi’s addition to the SDR basket should be seen in a broader context. It is one of a series of steps to encourage use of the renminbi in international transactions.

This agenda includes negotiating currency swap agreements, now more than two dozen, between the People’s Bank of China (PBOC) and foreign central banks. It also includes designating a Chinese financial institution to provide clearing and settlement services for transactions in renminbi in each leading financial center (in September, for example, the Bank of China was chosen as the official clearing bank for New York). And foreign entities are being authorized to issue renminbi-denominated bonds in China itself. Toward the end of August, Poland became the first European government to do so.

But the reality, again, is that these steps are more about symbolism than substance. The PBOC’s renminbi swaps are almost entirely unused. Designated clearing banks have not exactly been flooded with business. Offshore renminbi bank deposits are falling. The proportion of China’s merchandise trade settled in renminbi has been declining since mid-2015. And there is no sign that where the Polish government has so boldly ventured, other governments will soon follow.

The fault, to paraphrase Shakespeare, lies not in the stars but in China’s own financial markets. Since mid-2015, the country’s stock market has been on a rollercoaster. Every international organization worth its salt, from the IMF to the Bank for International Settlements, has been warning of problems in China’s corporate bond market. And if defaults on loans to corporations are widespread, as these organizations predict, the implications for the banks could be dire.

The problem is mistaken tactics by the Chinese government. The government and the PBOC believe that relaxing capital controls and allowing financial capital to flow more freely in and out of the country will force financial market participants to up their game. Companies will have to upgrade their accounting standards, and banks their risk-management practices, to cope with the faster pace of financial transactions. The result will be more liquid and stable financial markets, in turn making the renminbi more attractive as a unit of account, means of payment, and store of value for residents and foreigners alike.

Unfortunately, assuming a result doesn’t make it so. If Chinese banks and firms are slow to adjust, liberalizing international capital flows will lead only to more volatility, fewer offshore deposits, and less reliance on the renminbi for settling merchandise transactions – exactly as has been the case recently.

Chinese policymakers must now put the horse before the cart. The most important step they can take to foster renminbi internationalization is to strengthen domestic financial markets, modernize regulation, and streamline contract enforcement. If China wants to transform the renminbi into a first-class global currency, it should pay less attention to renminbi trading in New York and the currency’s weight in the SDR basket, and more to the development of deep, liquid, and stable financial markets at home.

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Are Emerging Markets about to Switch US Treasuries for SDR Bonds? (FREEPOM)

Posted by hkarner - 24. August 2016

Philosophy of Metrics, 

By JC Collins

The first issuance of SDR denominated bonds in the Chinese market is being implemented by the World Bank.  Let that sink in for a moment.  The World Bank, the great bastion of the western banking elite, will be providing SDR bonds specifically for the Chinese market. This is a major defeat for all of those who repeatedly promoted the idea that wealthy interests within China were attempting to overthrow the western banking structure or implement a competing system.

A second issuance of SDR bonds will take place through the China Development Bank.  The purpose of both issuances is multiform.

First, SDR denominated bonds will allow for the diversification of the currency composition of foreign exchange reserves.  This will allow the governments of emerging markets, whose central banks have carried the bulk of US Treasury bond debt for decades, to minimize their exposure to the single currency Treasury Bonds and exchange rate pressures. Den Rest des Beitrags lesen »

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The Renminbi Goes Forth

Posted by hkarner - 11. Dezember 2015

Photo of Paola Subacchi

Paola Subacchi

Paola Subacchi is Research Director of International Economics at Chatham House and Professor of Economics at the University of Bologna.

DEC 11, 2015, Project Syndicate

LONDON – The Nobel laureate Robert Mundell once said, “great powers have great currencies.” China, whose government Mundell long advised, seemed to take this notion to heart, prodding the International Monetary Fund for years to add the renminbi to the basket of currencies that determine the value of the IMF’s reserve asset, the Special Drawing Right (SDR). And now the IMF has decided to do just that, in what amounts to a huge vote of confidence in China’s capacity to play a major role in international finance.

Many market participants, however, remain skeptical about the decision. Does the renminbi really belong in the same category as the US dollar, the euro, the Japanese yen, and the British pound in the international monetary system? Den Rest des Beitrags lesen »

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Crashing the SDR

Posted by hkarner - 20. November 2015

Photo of Benjamin J. Cohen

Benjamin J. Cohen

Benjamin J. Cohen is Professor of International Political Economy at the University of California, Santa Barbara, and is the author of Currency Power: Understanding Monetary Rivalry.

NOV 19, 2015, Project Syndicate

SANTA BARBARA – The Chinese government’s campaign to have its currency, the renminbi, included in the International Monetary Fund’s reserve asset appears to be on the brink of success. Last week, IMF staff formally recommended adding the renminbi to the basket of currencies that determines the value of its so-called Special Drawing Rights (SDRs).

The addition of the renminbi to the basket, which currently includes the US dollar, the euro, the British pound, and the Japanese yen, would provide China with a boost to its prestige. More important, it would advance the government’s efforts to internationalize the renminbi. But it would also be a mistake. The decision to recommend the renminbi’s inclusion, far from having been made on sound economic grounds, can only be understood as political. As such, the long-term consequences are likely to be regrettable. Den Rest des Beitrags lesen »

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Durchbruch für China: Yuan wird Welt-Reservewährung

Posted by hkarner - 17. November 2015

Deutsche Wirtschafts Nachrichten  | 

Der IWF hat beschlossen, die Aufnahme des chinesischen Yuan in den Währungskorb aufzunehmen. Damit kann sich China als Land mit einer Weltreservewährung gegenüber den USA und dem Dollar profilieren.

Yuan DollarDer IWF hat grünes Licht für den Yuan als neuer Weltwährung gegeben.

Der Stab des Internationalen Währungsfonds (IWF) hat die Aufnahme der chinesischen Währung Renminbi (RMB) in dessen Währungskorb vorgeschlagen. IWF-Chefin Christine Lagarde teilte am Freitagabend in Washington mit, die Experten ihrer Institution seien zu dem Ergebnis gekommen, dass Chinas Währung die Bedingungen erfülle, um als fünfte Währung nach dem US-Dollar, dem japanischen Yen, dem Euro und dem britischen Pfund Teil des Währungskorbes zu werden. „Ich unterstützte diesen Befund“, erklärte Lagarde. Die Entscheidung liege nun beim Exekutivrat des Fonds. Dieser werde unter ihrem Vorsitz am 30. November zusammentreten und über die Empfehlung beraten.

Dass der Renminbi eine weltweit wichtige Exportwährung ist, was eines der Kriterien für die Aufnahme in den Währungskorb ist, wird schon seit längerem diskutiert. Den Rest des Beitrags lesen »

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Confronting the Coming Liquidity Crisis

Posted by hkarner - 7. November 2015

Photo of Camila Villard Duran

Camila Villard Duran

Camila Villard Duran, a professor of law at the University of São Paulo, is an Oxford-Princeton Global Leaders Fellow in theGlobal Economic Governance Program, University of Oxford.

NOV 6, 2015, Project Syndicate

SAO PAULO – This month, G-20 leaders will meet in Antalya, Turkey, for their tenth summit since the 2007 global financial crisis. But, despite all of these meetings – high-profile events involving top decision-makers from the world’s most influential economies – no real progress has been made toward reforming the international financial architecture. Indeed, the group has not seriously engaged with the subject since the 2010 summit in Seoul. Put simply, the G-20 is failing in its primary and original purpose of enhancing global financial and monetary stability.

A big part of the problem is that the G-20 agenda has become increasingly congested over the years. At a time of looming financial upheaval, the G-20 must stop attempting to tackle a broad array of issues simultaneously – a goal that has proved impossible – and go back to basics. Den Rest des Beitrags lesen »

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A Special Moment for Special Drawing Rights

Posted by hkarner - 31. Oktober 2015

Photo of José Antonio Ocampo

José Antonio Ocampo

José Antonio Ocampo, former United Nations Under-Secretary-General for Economic and Social Affairs and former Finance Minister of Colombia, is Professor of Professional Practice and Member of the Committee on Global Thought at Columbia University. He is the co-author (with Luis Bértola) of The Economic Development of Latin America since Independence.

OCT 30, 2015, Project Syndicate

NEW YORK – The recent annual meetings of the International Monetary Fund and the World Bank in Lima, Peru, were dominated by talk of the weakness of several emerging and developing economies. But the discussion focused very little on one key cause: the global monetary system. Much more will be said next month at the IMF board, though what the Fund will do remains an open question.

The problem that emerging and developing economies are facing stems from the fact that their capital inflows follow a strongly pro-cyclical pattern. When they were growing rapidly – especially compared to the advanced economies – they attracted massive amounts of capital. But as risks multiplied, capital started to flow back toward a reserve-issuing country – namely, the United States. After all, the US is set to raise interest rates, and the dollar has appreciated against virtually all of the world’s currencies. Den Rest des Beitrags lesen »

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Modernizing the IMF

Posted by hkarner - 10. Juli 2015

PRINCETON – The international system of economic governance is at a turning point. After 70 years, the Bretton Woods institutions – the International Monetary Fund and the World Bank –appear creaky, with their very legitimacy being questioned in many quarters. If they are to remain relevant, real changes must be made.

The IMF, in particular, is facing challenges on all sides. In the United States, Congress is stalling not only on international issues like trade, but also on the implementation of reforms that would expand the role of emerging economies in the IMF. For its part, Europe has drawn the organization into its debt crisis, with Greece having already missed a payment on its IMF loans (though the Fund is not calling it a default). And, in Asia, the IMF still carries a stigma, because of its flawed response to the region’s financial crisis in the late 1990s.

How can the IMF reprise its role as a guardian of international financial stability? One solution could be to adjust its international reserve asset, the Special Drawing Rights (SDR), by adding the Chinese renminbi to the basket of currencies that determines its value. Den Rest des Beitrags lesen »

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